Skip to content Menu

NACUBO submitted comments to the Department of Education on June 20 in response to a Notice of Proposed Rulemaking (NPRM) on Financial Value Transparency and Gainful Employment (GE), Financial Responsibility, Certification Procedures, Administrative Capability, and Ability to Benefit (ATB).

NACUBO endorsed comments provided by the American Council on Education and provided additional insights on financial responsibility and implementation guidance. NACUBO highlighted areas of concern, including—

  1. Additional disclosures in the notes to the financial statements. The proposed rule would require institutions to provide detailed information on related entities, including their name, location, description, and any transactions between the related party and the institution. Requirements to disclose all transactions exceed reporting requirements under Generally Accepted Accounting Principles (GAAP) and are problematic because they go beyond what auditors can provide as reasonable assurance for in their audit opinions. Additionally, listing related party individuals may violate regulations regarding the disclosure of personal information. NACUBO also endorsed comments submitted by the AICPA on this topic.

  2. Time to report triggering events. The proposed regulations would give institutions only 10 days to report certain mandatory and discretionary financial events that trigger mandated reporting to the federal government. This short reporting window could be burdensome for institutions, particularly small, nonprofit colleges and universities with limited resources as well as large, complex institutions. NACUBO recommended extending the reporting deadline to 21 days to align with a common benchmark used by institutions that go through a monthly close with related financial reporting.

  3. Public institution requirements. Public institutions can prove their financial responsibility by obtaining a designation from a government entity and providing a letter confirming their status. The NPRM proposes additional letters for financial responsibility and recertification, which would create unnecessary administrative burdens and communication between the Department of Education, public institutions, and their state. Furthermore, the regulations do not exempt public institutions from providing financial protection in the event of triggering events, despite their lower risk of sudden closure. NACUBO recommended either clarifying the rationale behind these requirements or accepting existing state official letters as sufficient evidence of financial responsibility for public institutions.


NACUBO also expressed concerns about proposals on liquidity disclosures and single audits. As written, the proposed requirement for disclosures related to an institution’s liquidity could lead to a financially irresponsible status because nonprofit entities already have obligations under GAAP to disclose relevant information about liquidity and restrictions in their financial statements. NACUBO recommended excluding liquidity disclosure requirements under FASB ASC 958-250-50-1 to avoid imposing additional financial burdens on nonprofits. NACUBO also pointed out that the proposed audit requirements in the NPRM contradict the purpose of the Single Audit Act, which aims to prevent federal agencies from imposing unique compliance and audit demands on nonprofit recipients of federal funds.

Finally, NACUBO raised concerns about a proposed change to Program Participation Agreements with ED regarding institutions’ policies on transcript holds, as it could negatively impact students and institutions. NACUBO highlighted the practical challenges in implementing the proposed changes, including difficulties in identifying debts tied to Return to Title IV (R2T4) calculations and potential conflicts with state laws on forgiving debts. NACUBO recommended excluding the R2T4 provision and urged ED to examine transcript holds in future negotiated rulemaking sessions.

Next Steps

After reviewing comments, ED will finalize the regulatory language. According to the master calendar provisions of the Higher Education Act, ED is required to issue the final rules by November 1, 2023, for them to take effect at the beginning of the next award year (July 1, 2024). If ED fails to meet the November 1 deadline, the regulations would not go into effect until July 1, 2025, at the earliest.

Contact

Ashley Jackson

Director, Government Affairs

202.861.2522

Contact

Bryan Dickson

Director, Student Financial Services and Educational Programs

202.861.2505

Contact

Sue Menditto

Senior Director, Accounting Policy

202.861.2542


Related Content

Capitol Hill Outlook: Lawmakers Prioritize Consumer Protection in Higher Education

Recent legislative and regulatory proposals center on consumer protections for college students and may add to regulatory workloads at institutions.

Department of Education Outlines Plan to Assist Institutions Following FAFSA Delays

ED will allocate $50 million in direct funding for technical assistance and support and will provide tools to help colleges efficiently process student records and deliver financial aid packages.

ED Announces Operational Flexibilities as FAFSA Rollout Continues

To help colleges and universities focus on the work ahead, the Department of Education announced that it will provide some administrative relief within the verification, program review, and recertification processes.